By Nicole Steitz, a law clerk in WLF’s Litigation Division who will be entering her second year at Georgetown University Law Center.

In 2010, the Supreme Court decided in Free Enterprise Fund v. Public Company Accounting Oversight Board that “multilevel protection [of SEC board members] from removal is contrary to Article II’s vesting of the executive power in the President.” No longer is it the case that Congress can unduly restrict the President’s plenary removal power for officers at the SEC or other agencies. Free Enterprise Fund was the beginning of the Court breathing new life into the Appointments Clause.

Eight years later, in Lucia v. SEC the Court held that ALJs must be appointed by the President or principal officers, not hired by agency staff. Lucia established that ALJs are inferior officers, subject to the same appointment requirements as all other inferior officers. And just as the inferior officers in Free Enterprise Fund couldn’t be doubly insulated from removal, neither can ALJs.

Despite this, several agencies’ ALJs continue to enjoy dual for-cause removal protections. Last month, in Calcutt v. FDIC, a three-judge panel declined to resolve Calcutt’s challenges to the FDIC ALJs’ double removal protections. Rather, the panel claimed the protections did not affect the FDIC’s final order and, therefore, it was a harmless error at worst. Yet it’s impossible to tell how the panel determined this. Calcutt never had a chance to show that the removal protections prejudiced him. Had the panel remanded to the FDIC, Calcutt could have shown harm. But the panel denied Calcutt the opportunity for relief on this structural constitutional violation.

At least the Sixth Circuit addressed some of Calcutt’s claims. The same can’t be said for the Ninth Circuit. In Axon Enterprise, Inc. v. FTC, Axon noted that both the FTC commissioners and the ALJ that tried its case were protected by unconstitutional for-cause protections. Yet despite admitting the likelihood that “the FTC ha[d] stacked the deck in its favor in its administrative proceedings,” the Ninth Circuit didn’t consider the merits of Axon’s suit. Rather, it invoked Thunder Basin to bar Axon from bringing this issue to court while its FTC proceedings were still ongoing.

Not only is Thunder Basin’s test for pre-enforcement unworkable, it is also irrelevant in Axon. Free Enterprise Fund clearly “‘foreclos[ed] any possibility that’ district courts lack jurisdiction to consider challenges to agencies’ structures.” Instead, Free Enterprise Fund established that parties like Axon may raise constitutional claims in federal court while agency proceedings occur.

When the Ninth Circuit used Thunder Basin to evade that command, it sent the message that agencies can delay or even deny remedies for constitutional violations by draining parties’ resources. Axon has spent more than $20 million in legal fees without a merits adjudication of its constitutional challenges by an Article III tribunal. This type of costly review directly conflicts with the principle that companies need not “bet the farm to test the constitutionality of the ALJs.”

Further, Axon sets the standard that Congress can create agencies with unconstitutional structures ad infinitum without interference. Although Axon had the resources to bring its structural challenges, many other parties will not. And even if a party has enough resources to make it through an agency’s appeals process, only those actions encapsulated in a final agency ruling are reviewable in court. So if a non-final agency order addresses structural constitutional challenges, the agency can escape judicial review as long as no final order is issued. This is anything but “meaningful” judicial review.

Not all courts have interpreted Free Enterprise Fund to bar relief for constitutional violations. When the Fifth Circuit decided Cochran v. SEC, it read Free Enterprise Fund more broadly than all other circuits. Instead of requiring resolution of the SEC’s proceedings against Cochran before raising constitutional challenges in court, the Fifth Circuit held that Free Enterprise Fund “did not strip jurisdiction over collateral constitutional challenges.” In turn, Cochran was free to resolve both issues simultaneously.

Given the diverging applications of Free Enterprise, the Supreme Court must clarify that there is a remedy for structural constitutional violations when it hears SEC v. Cochran next term. Affirming Cochran will make agencies’ investigations far more efficient as agencies focus on the claims they’re most experienced with while sending constitutional issues directly to court. This would also ensure that parties can always seek relief for structural constitutional violations, even when the agency does not issue a final order subject to review by a court of appeals.